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December 2017

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Ginners, nationwide have suspended purchasing of cotton from the farmers for an indefinite period, the Pakistan Cotton Ginners Association (PCGA) has announced. The suspension will remain in effect till the government announces a minimum support price and start purchasing cotton through the state owned Trading Corporation of Pakistan (TCP).

The association alleged that the government had announced MSP for wheat at the time of its cultivation, but neglected to declare MSP for cotton and on the other hand cotton rates had dropped to their lowest in recent times resulting in 1.5 million bales of cotton lying unsold in godowns of ginneries.

They have appealed to the government to order TCP to purchase cotton from the market to arrest the downfall in prices and at the same time bring relief to the cotton farmers. They have warned that if the above was not done immediately, there were chances that the cotton economy would sink.

They lamented that since the beginning of the economic turmoil and resultant fall in prices of cotton, banks had reduced credit limits to the ginneries which were also resulting in a liquidity crisis and they were unable to purchase cotton from the farmers. The association added by saying that interest rates had also been hiked by the banks and financial institutions by about 4-5 percent.

According to the association, cotton in international markets was trading at a higher price than in Pakistan, but textile mills in Pakistan were offering rates very much below the international rates. They made it very clear that it was not possible for them to sell cotton at Rs 2800-2900 per maund after purchasing the cotton flowers from farmers at Rs 1600-1800 per maund.